Inflation hit well-off households harder during boom

Well-off households in Ireland bore the brunt of inflation during the boom, largely because of the rapid rise in housing costs, a study by the Economic and Social Research Institute has found.

However, the pattern was reversed during the recession with low-income families suffering more from rising prices than their wealthier counterparts.

The ESRI study assessed inflation rates for low- and high-income households across two periods, 2003-2008 and 2009-2014.

Low- and high-income households typically purchase different baskets of goods and services.

As a result, inflation across different income groups can diverge from inflation as measured by the Consumer Price Index, which is based on goods averaged over households.

The study revealed that, in the five years leading up to the crash in 2008, inflation for low-income households was below the State’s average inflation rate, while inflation for high-income households was above that average.

This pattern was turned on its head by the deepest recession in decades. The ESRI pinpointed housing costs as the major contributing factor. Low-income groups were more likely to rent their homes.